Wednesday, May 27, 2009

Microsoft to launch Zune with Xbox 360

Microsoft unveiled plans to integrate its Zune digital entertainment service with the highly popular Xbox 360 platform, in a move designed more to confirm rumors than to provide specifics. The company will also bring a new Zune device to market this fall, called the Zune HD.

The company has talked about integrating Zune with the Xbox 360 since the service's launch, so the evolution to finally doing so carries significance. However the content included at first is limited to video, not music or games. Exactly what kind of video content will be shared between the two services is not yet clear; details are expected next week.

However Chris Stephenson, GM of global marketing for Zune, tells Billboard.biz that the Zune video service will essentially replace the current Xbox Live Video Marketplace feature. All Xbox Live members will have access to the new content and the expansion of Zune into the Xbox 360 allows Microsoft to offer the service internationally.

The new HD Zune, meanwhile, is also focused heavily on video, with a high-definition LCD screen and widescreen viewing mode. The WiFi connected device allows for instant music and video streaming directly from the device, a newly added Internet browser, as well as compatibility with the growing HD-Radio standard. But overall, Microsoft's new Zune details are focused on video, which Stephenson insists does not reflect a distancing from music.

"It's absolutely about music as it is about video," he says. "As we prioritize the things we need to get to market, video was the thing that really lit up. The Xbox experience is a living room experience. So it's important to think of this as a first step."

Digital video delivery - either to portable devices or within the home - is a wide open market that no single provider has yet dominated the way Apple has in the music space and Nintendo has in the handheld gaming space.

To be sure, this represents a baby step for Microsoft's broader effort to merge the Zune, Xbox and, eventually, Windows Mobile communities into one. The vision is to deliver content to the PC, the TV and the mobile phone. Microsoft wants to unify that experience through coordination of the backend technology that power content delivery to each.

"It's really allowing your content to flow across the different screens you have," Stephenson says. "Everything feeds back to a single ID. If you think about the backend all of this is built on, whether it's the content or the billing or the identity, it's all on a common infrastructure. At a technical level, it allows those experiences to happen."

But a "connected entertainment" strategy has been a core part of the Zune pitch from the start, which the company has yet to implement in a meaningful way from either a content or a device level. Details on how it will integrate video content between Zune and the Xbox 360 are expected next week, during Microsoft's press event at the E3 videogame convention next week.